Plan, prepare and send budget proposals

1. Administration of the Finance
- Plan, prepare and send budget proposals
Nirmala Roberts
India

2. Finance
• System of creating, circulating and managing
money
• Management of large amounts of money,
especially by governments or large companies
• Period - long term
• Eg. – Bank accounts, credit cards, mortgages, lines
of credits, taxes, savings, investments, spending….
• Types – Personal, corporate, public (Govt.), private

3. Financial Administration
� The job of managing financial tasks for a
company or organization
Eg. Controlling the budget, writing financial
reports, providing money for projects
� The financial administration staff – responsible for
overall fiscal management, accounting & financial
reporting for the Dept.

4. Budget
� “Bougette” (French) – A leather briefcase.
� Budget – A numerical description of expected
income and planned expenditure for an organization
for a specified period of time.
� An operational plan, for a definite period usually a
year expressed in financial terms and based on the
expected income and expenditure. – H M Donovan

5. Budgeting
� Allocation of scarce resources acc to
forecasted needs for proposed activities over a
specified period of time.
�A tool for planning, monitoring and controlling the
income and expenditure
�Involves setting short-term objectives and expressing
them in the budgets
�Includes sales, production, distribution and financial
aspects of the firm.

6. Purpose of Budgeting…
� To ensure effective use of scarce financial and
non financial resources -
�A useful format for communication of fiscal
objectives
�A mechanism for translating fiscal objective into
projected monthly spending pattern
�Enhance fiscal planning & decision making
�Clearly recognize controllable and uncontrollable
cost areas
�Allow feedback of utilization of budget

7. …Purpose of Budgeting
�Help identify problem areas & facilitate effective
solution
�Provide means for measuring & recording
financial success acc to organizational objectives
�Coordinate efforts of various departments
�Establish a frame of reference for the managerial
decision making
�Provide a criterion for evaluating managerial
performance

8. Importance of Budget
� Serves as a guide for action
� Helps to weigh the values and to make decision x sos
� Helps plan future course of action & to have over-all
control of activities in the organization
� Facilitates coordination operation of various depts
and sections for realizing organizational objectives

9. Characteristics of Budget
� Flexible
� Produce of joint venture & cooperation of HODs at
different levels
� Synthesis of past, present & future
� In the form of statistical standard laid down in specific
numerical terms
� Supported by top mgt through the period of its
planning and implementation
� In the form of statistical standard, in specific
numerical terms.

13. Classification of Budget
� Acc to Coverage of functions –
� Master B
� Functional B
� Acc to Natures of activities covered -
� Capital B
� Revenue B
� Acc to Period of budgets -
� Long term B
� Short term B
� Acc to Flexibility adopted -
� Fixed B
� Flexible B
Has mainly 3 sections –
� Manpower budget
� Capital expenditure
budget
� Operating budget

14. Manpower budget - Wages & other benefits for
temporary & regular workers
� Capital expenditure budget - Purchase of
land, buildings, equipment of great expense
& long life
� Operating budget – Cost of supplies, minor
equipment, repairs & overhead expenses

15. Types of Budget
� Incremental
� Flexible
� Rollover
� Open ended
� Fixed ceiling
� Performance
� Programme
� Production
� Revenue & expense
� Capital expenditure
� Zero-based/ Sunset
� Sales
� Cash

16. Steps in Budgeting
� Determine the requirements – Inputs from all levels
of hierarchy
� Develop plan – Budget for 12 months  set.zero
based budget
� Analyze and control the operations – Continuous
monitoring
� Review the plan – Periodic revision & modification

17. Planning the Budget
� Budget estimates for the ensuing year –
Prepared in Sep-Oct of current year
� Submit by end of Oct
� Every head of office prepares budget estimate – Salaries,
contingent expenses
� Only costs of sanctioned posts & existing budget items are
included
� For new items – separate proposals are made (=schedule of
new demands)
� All likely factors to be taken into consideration

18. Budget preparation
includes…
� Sound forecasting
� Adequate & well conceived accounting system
� Well devised cost accounting system
� Fixed lines of authority & responsibility
� Budget committee
� Business policies
� Statistical information
� Period of budget – Usually a year

19. Steps in Budgeting…
� Establish operational goals, objectives & policies of the orgn.
� Translate the goals into quantifiable objectives for
organizational units  i.e. Dept.al goals
� Review the existing programs - assignment of responsibilities,
preparation of timetable
� Revise dept.al budget and prepare master budget.
� Compute manpower, capital, operating expenses
� Test financial feasibility of master budget, approve final
document and distribute to all parties involved.

20. …Steps in Budgeting
� Every HOD prepares budget estimate in r/o salaries of
establishment, contingent expenditure and others. (eg.
Telephone, office expenses, rent of building…)
� Review of objectives of existing program & writing objectives
for proposed program
� Identify alternate methods with objectives & price of each
� Make budget request
� Make comparisons for most cost-effective budget

21. � Salaries for professional, clerical and domestic staff
& drivers
� Stipends for students
� New equipments and repairs
� Linen and other household supplies
� Maintenance of transport and cost of petrol/ diesel
� Library - Setting-up/ maintenance; purchasing
books, journals & daily newspapers, stationary,
furniture & other items

22. � Office supplies including stationary and postage
� Contingency fund - for educational tours,
professional activities, capping and graduation
ceremonies, prizes, entertainments etc
� Office supplies- stationary items
� External lecturers- for payment in accordance with
the policy of the controlling authority

23. � Done by the principal
� In conference with the President/ Chairman and other
budgetary unit heads
� Assisted by office staff and College staff
� The budget allotment is made known to the staff
� The staff establish priorities among items with plans for
proper accounts to be maintained
Preparation of Budget statement

24. Preparation….
� Collect the requirements from the HODs & confer
with them
� Review the budget expenditure of current year against
the statistical data (of manpower, capital & operating
budget)
� Ascertain if any changes contemplated

25. …Preparation
� Prepare the program to be covered by the new budget
� Estimate the req for the ensuing year, from info
gathered
� Determine the % of allocation for each aspect
� Prepare a summary of new needs
� Present the proposal with justification

26. � Summary of estimated costs for an upcoming project
in order to secure funding from project stakeholders.
� The cost elements are broken down for clarity
� The stakeholders see the benefits and/or drawbacks of
getting involved
� Includes - Budget approved in the previous year, the
actual expenditure and projected budget.
The proposal with all the enclosures is forwarded to the
Finance director.
BUDGET PROPOSAL

27. Budget presentation
Item No Actual
Budget of last year (2020-21)
Approved
Budget of current year (2021-
2022)
Proposed
Budget of coming year (2023 -
2024)
Income Exp Income Exp Income Exp
1
2
3
4

28. � Managers present the budget to the Finance Committee for
review and approval
� The worksheets are scrutinized by the stake holders
� A comparison is made with previous budget
� Justification sought on the budget request
� Adjustments made as required
� The budget is passed
Passing the Budget proposal

29. ADVANTAGES OF BUDGETING..
1. Fixes accountability along with responsibility and
authority.
2. Encourages managers to make careful analysis of
operation & make careful decisions/ corrective
measures
3. Weakness in the organization is revealed,
corrective measures taken.
4. Supply needs can be projected and waste
minimized

30. ..ADVANTAGES OF BUDGETING
5. Financial matters can be handled in an orderly,
coordinated and balanced manner
6. Clarity in identification of financial and service
goals
7. States goals for all units and their standards of
performance
8. Stresses on continuous nature of planning and
control process.

31. DISADVANTAGES OF BUDGETING
1. All aspects of org. al performance converted into monetary
values for a single comparable unit of measurement
2. Danger of over budgeting
3. Forecasting though required can be uncertain
4. Need for skill and experience for successful budgetary control.
5. Budget planning is time- consuming and expensive
6. Budgetary goals can gain autocratic control of the
organization
7. May become an end in itself instead of means to end.
 Budgetary goals may supersede agency goals

32. Problems in Budgeting
� Lack of specific goals and objectives
� Lack of training and motivation
� Departmental goals may be at variance with the
corporate goals
� Disproportionate allocation of funds
� Short term vs long term planning